SALVAGING OF DEFECTIVE ITEMS WITH EPQ MODEL

Abstract

In a production/inventory situation items which arereceived or produced are not of perfectquality. Thus the presence of defects which is inevitable in a produced/ordered lot is sorted out by the process of screening. Handling of the defective items varies by industry and product types. For example, defective items may be dealt by the way of rework process or by sold at discount prices.We consider an EPQ model with salvaging process of defective items for which the items of poor quality detected in the screening process of a lot are sold at a discounted price and we considered handbill adv. to get the customer’s attention about the product and brand name with the inclusion of some environmental issues too. The expected profit functions are developed using renewal reward theory, and closed form of expressions for the optimal production lot size are derived with numerical example